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WIPP Members Speak Out on Minimum Wage

WE Decide 2016, Powered by Women Impacting Public Policy (WIPP) and Personal BlackBox, is uniting women in business across the country to raise their voices and engage in the 2016 presidential election to educate the candidates, the media and voters on the issues of importance to women entrepreneurs.

This week we focusing on the minimum wage and its impact on women-owned small businesses and their workers. We have a guest blog post by Ceil McCloy and Brenda Barwick, two women business owners and WIPP members with differing viewpoints on the minimum wage.

President Franklin Delano Roosevelt signed the Fair Labor Standards Act of 1938 which among other provisions established a minimum wage. Roosevelt, when he sent the bill to Congress in 1937 stated “all our able-bodied men and women should be able to have a fair day’s pay for a fair day’s work. In the more than 75 years since Congress first enacted a federal minimum wage, at 25 cents an hour, lawmakers have increased it many times, reaching the current level of $7.25 an hour in 2009. And with every increase the same objections have been raised. It will increase unemployment. It will hurt small businesses and put them out of business. It will slow the economy. These doomsday predictions have never come to fruition.

Employers are recognizing that an increase in minimum wage is good for business. Workers earning low wages tend to be less committed to their jobs than better paid workers and are less likely to stay at their jobs. The accommodations and food services sector, with a majority of minimum wage workers, has an annual turnover rate of nearly 63 percent, while “limited service restaurants” (fast food restaurants such as McDonald’s) have a turnover rate of well over 100%. The retail trade, which employs cashiers, customer service representatives, stock clerks and other low-wage workers, has a turnover rate of nearly 50 percent. Employee turnover forces businesses to constantly find and train new workers, costing firms significant amounts of money and time. In the fast food industry, the cost of turnover is approximately $4,700 each time a worker leaves his or her job. Studies show that higher wages can substantially reduce turnover and the costs associated with replacing lost workers. The benefit from lower turnover explains why large companies as well as many small businesses have chosen to invest in higher wages as part of a highly competitive business strategy.

Job loss is often stated as a reason not to increase the minimum wage. This is simply not true. As Goldman Sachs analysts (2016) recently noted, citing a 2010 study by University of California economists that examined job-growth patterns across every border in the U.S. where one county had a higher wage than a neighboring county, “the economic literature has typically found no effect on employment” from recent U.S. minimum-wage increases. This report’s findings mirror decades of more sophisticated academic research, providing simple confirmation that opponents’ predictions of job losses when minimum-wage increases are not rooted in facts.

Can raising the minimum wage help the economy? Yes! Research has shown that raising the minimum wage boosts consumer spending, increasing the demand that drives economic growth. A 2011 study by the Chicago Federal Reserve Bank found that minimum wage increases raise incomes and increase consumer spending. The authors examined 23 years of household spending data and found that for every dollar increase for a minimum wage worker results in $2,800 in new consumer spending by his or her household over the following year. A 2009 study by the Economic Policy Institute estimates that President Obama’s campaign to raise the minimum wage to $9.50 by 2011 would inject $60 billion in additional spending into the economy.

We should enact legislation to increase the federal minimum wage and peg increases to the annual inflation rate.

Econ 101: Free Markets Raise Wages, Not Government

By Brenda Barwick, APR, President of Jones PR and Oklahoma Chair of Maggie’s List.

One of the biggest misconceptions about conservatives on the issue of minimum wage is that we want the lowest wage, when in fact we want to pay our people as high as possible. One of the principles that makes America unique from almost all other countries is that our economy was founded on a free market system, or simply, supply and demand.

An economy with minimal government regulation allows for businesses to grow and prosper naturally, which results in wage growth. For examples of where market forces have dramatically increased base wages, look no further than some of America’s cities that have strategically replaced traditional low-paying industry jobs by recruiting high-tech and health-sciences companies with higher wage positions, resulting in greater prosperity and transformational change.

Federal mandates prohibit the free market from functioning properly as intended. Government interference is particularly disruptive and harmful to small business owner’s ability to make the best decisions for her employees. Business owners and managers know their business better than anyone else and are naturally incentivized to see their employees succeed. There should be a floor for common decency and respect, but it is all together different to mandate high wages that business owners cannot meet.

Now that it is summer, most of us reading this blog cannot make up for a $15 mandatory increase when we have budgeted $8 or $10 for a summer position. We all remember the joy and excitement of our first job in high school or college where we learned basic job skills. We need to ensure teens and young adults have the same opportunities we enjoyed and inspired us to strive beyond entry-level jobs so we can make a living wage for our families. By taking this opportunity away from young ambitious Americans by pricing them out of the marketplace, America’s future could be comprised of a workforce who never learned basic job skills before they arrive at their first real job.

The most prosperous path forward for all Americans of any age is to allow the free market to work properly. This system provides boundless opportunities for all Americans who desire to work and contribute to our society. Give our young people the same opportunities that benefited and prepared us for prosperous careers.

Let us know what you think! Take WE Decide 2016’s minimum wage quick poll here: